The key to successful digital transformation

While more flexible than larger enterprises, midmarket companies have to scale strategically

The key to successful digital transformation
Credit: Thinkstock

Nearly 70 percent of midmarket CIOs report their organizations are still in the infancy stages of the digital transformation process. So, how do these less rigid, yet prudent midmarket companies build the business cases and reduce failure rates?

At a high level, digital transformation is the need to connect business functions to streamline operations and drive efficiency. But changing hardware and software without a full understanding of the business process is transforming very little; it’s only serving to perpetuate IT as the scapegoat for project failures.

“The biggest innovation happens when the transformation is user [driven], not IT driven,” said Vicki Harper, NorthAmerica IT Director at Acument Global Technologies, a Michigan-based manufacturer. “In that form, it can spread quickly through the organization.”

The process requires an understanding of cultural and knowledge gaps for business users, a monumental and often politically charged challenge typically far outside IT’s purview.

While CIOs in the midmarket acknowledge that innovation and transformation are necessary, embarking down the path without user buy-in will inevitably yield varying degrees of resistance. 

The right mindset from the onset

Digital transformation is changing the way people interact. Updating a CRM to support a sales team will eventually impact finance, operations and the supply chain.

Feroz Merchiya recalled an instance of testing automation of a business process in his previous role as CTO at California Insurance Guarantee Association. (He recently joined professional services firm KAYGEN.) 

“There was resistance from an analyst and the QA team who were concerned for their jobs,” he recalled.

The goal was not to eliminate their positions but rather to free their time and resources to do more where they were actually needed.

“You have to ask people who do the work to show you their current processes and break those down to small atomic units,” he continued. “It’s not about changing methodology, but about changing mindset.”

Shifting perspective

Customer expectations have fundamentally changed the way businesses operate. And particularly in the manufacturing sector, the new level of visibility into operations makes some folks uncomfortable.

Damien Brennan, vice president and CIO at Artco Group International, a privately held niche steel manufacturer, asserts that if a consumer can order a $6 pair of socks online and track that package from a shipping warehouse to their doorstep, it’s certainly no longer feasible for a salesperson in the field to place an order and expect that customers will wait patiently to hear from a truck driver on the day products are scheduled for delivery.

“We’ve done a good job on the core plumbing of the company, and we’re sorting out where we need to invest now,” Brennan explained. “Manufacturers don’t always get exposure to buyers, logistics and sales people, but those users have the expectation that all data will be live.”

+ Also on CIO: An inside look at 10 real-world digital transformations +

Where transformation and innovation are used interchangeably, innovators are already functioning across the business, though they may not necessarily be part of the IT team

It’s an antiquated way of thinking, Brennan added, that IT has to own the applications, provide user access and manage the data contained therein. When he came into his current role, some employees were already using Smartsheet and Slack for their workflow collaboration, and the technologies were efficient and affordable.

“You have to involve business units, and ours is a fairly inclusive decision-making process, but greater agreement means faster rollouts,” he said. “Manufacturing margins are not like in banking, so anywhere I can save a few dollars, it’s much easier to get approval.”

Change is hard

At Acument, implementation of the Google Suite was partiallydriven by a need for better collaboration. The user base was highly adept at Microsoft Office, so asking users with 20-plus years of experience in the MS products suite to change the way they work was not without its challenges.

“The Google apps are of a different maturity and construct,” Harper noted. “Managementof the Google Suite is a huge divergence from the historical norm in midmarket.”

She ventured that the sizeable effort to migrate out of traditional applications, unknown security risks and lack of knowledge across internal IT teams regarding cloud technology are among the reasons some midmarket companies may be slower to adopt more innovative solutions. A recent 250-slide presentation required input from more than a dozen staffers, and timely collaboration would have been extremely difficult in the company’s original architecture.

Harper said in her experience, midmarket companies are less rigid in structure. Where top-down change of a sweeping type, such as a new ERP or new desktops, requires strong support from upper management, changes based on operational needs can be adapted more easilyusing grassroots efforts. Once the operations team on the plant floor at Acument understood Google Sheets, they began collecting more organized data with little guidance or push to do so.

For the heads of IT, leading digital innovation is a multi-phase process not always easily measured by traditional ROI calculators. First, CIOs must get management on board, execute by giving teams the tools with proper training and then driving change through a series of efforts to transform processes.

NEW! Download the State of the CIO 2017 report